REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee
oversees the Company’s financial reporting process on behalf of the Board. In fulfilling its oversight responsibilities, the Audit
Committee reviewed and discussed with management the audited financial statements in the Company’s Form 10-K, including a discussion
of the acceptability of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial
statements.
The Audit Committee
reviewed and discussed with the independent registered public accounting firm, which is responsible for expressing an opinion on the conformity
of those audited financial statements with the standards of the Public Company Accounting Oversight Board, the matters required to be
discussed by Statements on Auditing Standards (SAS 61), as may be modified or supplemented, and their judgments as to the acceptability
of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under the
standards of the Public Company Accounting Oversight Board.
In addition, the Audit
Committee has discussed with the independent registered public accounting firm their independence from management and the Company, including
receiving the written disclosures and letter from the independent registered public accounting firm as required by the Independence Standards
Board Standard No. 1, as may be modified, or supplemented, and has considered the compatibility of any non-audit services with the
auditors’ independence.
The Audit Committee
discussed with the Company’s independent registered public accounting firm the overall scope and plans for their audit. The Audit
Committee met with the independent registered public accounting firm, with and without management present, to discuss the results of their
examinations and the overall quality of the Company’s financial reporting.
In
reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that
the audited financial statements be included in the Company’s Form 10-K for the year ended December 31, 2020 for filing
with the SEC.
|
Respectfully submitted,
The Audit Committee of the Board of Directors
Donna E. Epps, Chair
Barbara J. Duganier
Eric L. Oliver
|
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Lane Gorman Trubitt, LLC audited
the Trust’s financial statements for our fiscal year ended December 31, 2020 and December 31, 2019. Upon the completion
of such audit, Lane Gorman Trubitt, LLC’s engagement was completed, and Deloitte & Touche LLP became the Company’s
independent registered public accounting firm.
The following table presents fees
billed to the Trust for professional services rendered by Lane Gorman Trubitt, LLC, during 2020 and 2019:
|
|
Years
Ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Type of Fees:
|
|
|
|
|
|
|
|
|
Audit
fees
|
|
$
|
419,675
|
|
|
$
|
311
,000
|
|
Audit-related
fees
|
|
|
—
|
|
|
|
—
|
|
Tax
fees
|
|
|
—
|
|
|
|
—
|
|
All
other fees
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
419,675
|
|
|
$
|
311
,000
|
|
The Audit Committee of the Trust
approved all of the services provided by, and fees paid to, Lane Gorman Trubitt, LLC during the years ended December 31, 2020 and
2019.
The Audit Committee has established
a policy requiring approval by it of all fees for audit and non-audit services to be provided by the Company’s independent registered
public accountants, prior to commencement of such services. Consideration and approval of fees generally occurs at the Audit Committee’s
regularly scheduled meetings or, to the extent that such fees may relate to other matters to be considered at special meetings, at those
special meetings.
* * * * * * *
APPENDIX A
Texas
Pacific Land Corporation
2021
Incentive Plan
TABLE OF CONTENTS
Page
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
|
3
|
ARTICLE 2. DEFINITIONS
|
3
|
ARTICLE 3. ADMINISTRATION
|
7
|
ARTICLE 4. SHARES SUBJECT TO THIS PLAN AND MAXIMUM AWARDS
|
8
|
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
|
9
|
ARTICLE 6. STOCK OPTIONS
|
9
|
ARTICLE 7. STOCK APPRECIATION RIGHTS
|
11
|
ARTICLE 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
|
12
|
ARTICLE 9. PERFORMANCE UNITS/PERFORMANCE SHARES
|
13
|
ARTICLE 10. CASH-BASED AWARDS AND OTHER STOCK-BASED AWARDS
|
13
|
ARTICLE 11. TRANSFERABILITY OF AWARDS
|
14
|
ARTICLE 12. PERFORMANCE MEASURES
|
14
|
ARTICLE 13. MINIMUM VESTING OF SHARE-BASED AWARDS
|
15
|
ARTICLE 14. DIVIDEND EQUIVALENTS
|
15
|
ARTICLE 15. BENEFICIARY DESIGNATION
|
15
|
ARTICLE 16. RIGHTS OF PARTICIPANTS
|
15
|
ARTICLE 17. CHANGE OF CONTROL
|
16
|
ARTICLE 18. AMENDMENT, MODIFICATION, SUSPENSION, AND TERMINATION
|
17
|
ARTICLE 19. WITHHOLDING
|
18
|
ARTICLE 20. SUCCESSORS
|
18
|
ARTICLE 21. GENERAL PROVISIONS
|
18
|
Texas
Pacific Land Corporation
2021 Incentive Plan
|
Article 1.
|
Establishment,
Purpose, and Duration
|
1.1 Establishment. Texas Pacific Land Corporation (the “Company”) establishes an incentive compensation plan
to be known as the Texas Pacific Land Corporation 2021 Incentive Plan (this “Plan”), as set forth in this document.
This Plan
permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted
Stock Units, Performance Shares, Performance Units, Cash-Based Awards, and Other Stock-Based Awards.
This Plan’s effective date
is the date this Plan is approved by the Company’s shareholders (the “Effective Date”), and this Plan shall remain
in effect as provided in Section 1.3 hereof.
1.2 Purpose of this Plan. The purpose of this Plan is to provide a means whereby Employees develop a sense of proprietorship
and personal involvement in the development and financial success of the Company, and to encourage them to devote their best efforts
to the business of the Company, thereby advancing the interests of the Company and its shareholders. A further purpose of this Plan
is to provide a means through which the Company may attract able individuals to become Employees and to provide a means whereby
those individuals upon whom the responsibilities of the successful administration and management of the Company are of importance,
can acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the Company.
1.3 Duration
of this Plan. Unless sooner terminated as provided herein, this Plan shall terminate ten (10) years from the
Effective Date. After this Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in
accordance with their applicable terms and conditions and this Plan’s terms and conditions. Notwithstanding the foregoing, no
Incentive Stock Options may be granted more than ten (10) years after the earlier of (a) adoption of this Plan by the
Board, or (b) the Effective Date.
Whenever used in this Plan, the
following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.
|
2.1
|
“Affiliate” shall mean any corporation or other entity (including, but not
limited to, a partnership or a limited liability company), that is affiliated with the Company through stock or equity ownership or otherwise,
and is designated as an Affiliate for purposes of this Plan by the Committee.
|
|
2.2
|
“Award” means, individually or collectively, a grant under this Plan of Nonqualified
Stock Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based
Awards, or Other Stock-Based Awards, in each case subject to the terms of this Plan.
|
|
2.3
|
“Award Agreement” means either (i) a written agreement entered into by the Company and a Participant setting
forth the terms and provisions applicable to an Award granted under this Plan, or (ii) a written or electronic statement issued by
the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof. The Committee
may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper
means for the acceptance thereof and actions thereunder by a Participant.
|
|
2.4
|
“Beneficial Owner” shall have the meaning ascribed
to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
|
|
2.5
|
“Board” or “Board of Directors” means
the Board of Directors of the Company.
|
|
2.6
|
“Cash-Based Award” means an Award, denominated
in cash, granted to a Participant as described in Article 10.
|
|
2.7
|
“Cause” means, unless otherwise specified in an Award Agreement or in an applicable
employment agreement between the Company and a Participant, with respect to any Participant, as determined by the Committee in its sole
discretion:
|
|
(a)
|
willful refusal to follow the lawful directions of a supervisor, which directions are consistent with
normal business practice;
|
|
(b)
|
indictment or conviction of, or plea of nolo contendere to, (i) any felony, or
(ii) another crime involving dishonesty or moral turpitude,
or Participant’s engaging in any embezzlement, financial misappropriation or fraud, related to their employment with the Company
or any Subsidiary or Affiliate;
|
|
(c)
|
engaging in any willful misconduct or gross negligence or willful act of dishonesty, including any violation of federal securities
laws, or violence or threat of violence, which is materially injurious to the Company or any Subsidiary or Affiliate;
|
|
(d)
|
repeated abuse of alcohol or drugs (legal or illegal) that, in the Company’s reasonable judgment,
materially impairs Participant’s ability to perform their duties; or
|
|
(e)
|
willful and knowing breach or violation of any material provision of their employment, including, but not limited to, any applicable
confidentiality, non-solicitation and non-competition requirements thereof.
|
|
2.8
|
“Change of Control” means the occurrence of any of the following events:
|
|
(i)
|
Any Person, other than (x) a fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary
or Affiliate, or (y) any corporation owned, directly or indirectly, by shareholders of the Company in substantially the same
proportions as their ownership of the Company’s Shares becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing
30% or more of the total voting power represented by the Company’s then outstanding voting securities;
|
|
(ii)
|
the sale of disposition by the Company of all or substantially all of the Company’s assets;
|
|
(iii)
|
the members of the Board of Directors as of the Effective Date (the “Incumbent Directors”) and any successor director
whose appointment is endorsed by the Incumbent Directors or any such duly-endorsed successor director cease to constitute a majority of
the Board; or
|
|
(iv)
|
a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding
or by being converted into
voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity
or its parent outstanding immediately after such merger or consolidation.
|
|
2.9
|
“Code” means the U.S. Internal Revenue Code of
1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references
to any applicable regu lations thereunder and any successor or similar provision.
|
|
2.10
|
“Committee” means the Compensation Committee of the Board or a subcommittee
thereof, or any other committee designated by the Board to administer this Plan. The members of the Committee shall (i) be appointed
from time to time by and shall serve at the discretion of the Board, and (ii) shall consist of “non-employee directors” as
defined in Section 16 of the Exchange Act. If the Committee does not exist or cannot function for any reason, the Board may take
any action under this Plan that would otherwise be the responsibility of the Committee.
|
|
2.11
|
“Company” or “Corporation” means Texas
Pacific Land Corporation and any successor thereto as provided in Article 20 herein.
|
|
2.12
|
“Effective Date” has the meaning set forth in
Section 1.1.
|
|
2.13
|
“Employee” means any individual performing services for the Company, an Affiliate,
or a Subsidiary and designated as an employee of the Company, its Affiliates, and/or its Subsidiaries on the payroll records thereof.
An Employee shall not include any individual during any period they are classified or treated by the Company, Affiliate, and/or Subsidiary
as an independent contractor, a consultant, or any employee of an employment, consulting, or temporary agency or any other entity other
than the Company, Affiliate, and/or Subsidiary, without regard to whether such individual is subsequently determined to have been, or
is subsequently retroactively reclassified as a common-law employee of the Company, Affiliate, and/or Subsidiary during such period.
|
|
2.14
|
“Exchange Act” means the Securities Exchange Act
of 1934, as amended from time to time, or any successor act thereto.
|
|
2.15
|
“Fair Market Value” means, on any given date, the closing price of a Share
as reported on the New York Stock Exchange (“NYSE”) composite tape on such date, or if Shares were not traded on NYSE on such
day, then on the next preceding day that Shares were traded on NYSE; in the event Shares are traded only on an exchange other than NYSE,
references herein to NYSE shall mean such other exchange. The Company may use an alternate method of determining the value of Shares for
accounting or any other purpose.
|
|
2.16
|
“Good Reason” means, unless otherwise specified
in an Award Agreement or in an applicable severance compensation or other employment-type agreement between the Company and a Participant,
with respect to any Participant, as determined by the Committee in its sole discretion:
|
|
(a)
|
a 10% or more diminution in Participant’s base salary as in effect on the last day of the immediately preceding calendar year
or a 30% or greater reduction in the amount of Participant’s target cash bonus as compared to the cash conus amount for the preceding
year;
|
|
(b)
|
a material diminution in Participant’s title, or the nature or scope of Participant’s authority, duties, or responsibilities
from those applicable to Participant immediately prior to the Change in Control; or
|
|
(c)
|
the Company’s requiring Participant to be based at any office or location that is more than 25 miles from Participant’s
principal place of employment prior to such change in loca tion.
|
In order for one of the events set
forth in (a), (b), or (c) to constitute a Good Reason, (x) Participant must notify the Company in writing of such fact and
the reasons therefor no later than 90 days after Participant knows or should have known that the relevant event has occurred,
(y) such grounds for termination (if susceptible to correction) are not corrected by the Company within thirty (30) days after
Participant’s notice (or, in the event that such grounds cannot be corrected with thirty (30) days, the Company has not taken
all reasonable steps within such thirty-day (30) period to correct such grounds as promptly as practicable thereafter); and
(z) Participant terminates Participant’s employment with the Company within thirty (30) days following expiration of such
thirty-day (30) period. Failure to satisfy the requirements of this paragraph will result in there not being a termination for Good
Reason for purposes of this Plan.
|
2.17
|
“Grant Date” means the date an Award is granted
to a Participant pursuant to this Plan.
|
|
2.18
|
“Grant Price” means the price established at the
time of grant of an SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.
|
|
2.19
|
“Incentive Stock Option” or “ISO” means an Option to purchase
Shares granted under Article 6 to an Employee and that is designated as an Incentive Stock Option and that is intended to meet the
requirements of Code Section 422, or any successor provision.
|
|
2.20
|
“Insider” shall mean an individual who is, on
the relevant date, an officer, or director of the Company, or a more than ten percent (10%) Beneficial Owner of any class of the Company’s
equity securities that is registered pursuant
to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.
|
|
2.21
|
“Nonqualified Stock Option” or “NQSO”
means an Option that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.
|
|
2.22
|
“Option” means an Incentive Stock Option or a
Nonqualified Stock Option, as described in Article 6.
|
|
2.23
|
“Option Price” means the price at which a Share
may be purchased by a Participant pursuant to an Option.
|
|
2.24
|
“Other Stock-Based Award” means an equity-based
or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10.
|
|
2.25
|
“Participant” means any eligible individual as
set forth in Article 5 to whom an Award is granted.
|
|
2.26
|
“Performance-Based Compensation” means compensation
under an Award that is subject to performance-based vesting, earning or payment conditions.
|
|
2.27
|
“Performance Measures” means measures as described
in Article 12 on which the performance goals are based.
|
|
2.28
|
“Performance Period” means the period of time
during which the performance goals must be met in order to determine the amount and/or vesting, earning or payment of an Award.
|
|
2.29
|
“Performance Share” means an Award under Article 9 herein and subject
to the terms of this Plan, denominated in Shares, the value of which at the time it is payable is determined by the extent to which the
applicable Performance Measures have been achieved.
|
|
2.30
|
“Performance Unit” means an Award under Article 9 herein and subject
to the terms of this Plan, denominated in units, the value of which at the time it is payable is determined by the extent to which the
applicable Performance Measures have been achieved.
|
|
2.31
|
“Period of Restriction” means the period when Restricted Stock or Restricted
Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of performance goals, or upon
the occurrence of other events as determined by the Committee, in its discretion), as provided in Article 8.
|
|
2.32
|
“Person” shall have the meaning ascribed to such
term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group”
as defined in Section 13(d) thereof.
|
|
2.33
|
“Plan” means this Texas Pacific Land Corporation
2021 Incentive Plan.
|
|
2.34
|
“Restricted Stock” means an Award granted to a
Participant pursuant to Article 8.
|
|
2.35
|
“Restricted Stock Unit” means an Award granted
to a Participant pursuant to Article 8, except no Shares are actually awarded to the Participant on the Grant Date.
|
|
2.36
|
“Share” means a share of common stock of the Company.
|
|
2.37
|
“Stock Appreciation Right” or “SAR”
means an Award, designated as an SAR, pursuant to the terms of Article 7 herein.
|
|
2.38
|
“Subsidiary” means any corporation or other entity, whether domestic or foreign,
in which the Company has or obtains, directly or indirectly, a proprietary interest of more than fifty percent (50%) by reason of stock
ownership or otherwise.
|
|
Article 3.
|
Administration
|
3.1 General. The Committee shall be responsible for administering this Plan, subject to this Article 3 and the other provisions
of this Plan. The Committee may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee,
and the Committee, the Company, and its officers and directors shall be entitled to rely upon the advice, opinions, or valuations of any
such individuals. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the
Participants, the Company, and all other interested individuals.
3.2 Authority
of the Committee. The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of this Plan
and any Award Agreement or other agreement or document ancillary to or in connection with this Plan, to determine eligibility for Awards
and to adopt such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Committee may deem necessary
or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions,
including the terms and conditions set forth in Award Agreements, granting Awards as an alternative to or as the form of payment for grants
or rights earned or due under compensation plans or arrangements of the Company, construing any ambiguous provision of this Plan or any
Award Agreement, and, subject to Article 18, adopting modifications and amendments to this Plan or any Award Agreement, including
without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its
Affiliates, and/or its Subsidiaries operate.
3.3 Delegation. The
Committee may delegate to one or more of its members or to one or more officers of the Company, and/or its Subsidiaries and
Affiliates or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Committee or
any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with
respect to any responsibility the Committee or such individuals may have under this Plan. The Committee may, by resolution,
authorize one or more officers of the Company to do one or both of the following on the same basis as can the Committee:
(a) designate Employees to be recipients of Awards and (b) determine
the size of any such Awards; provided, however, (i) the Committee shall not delegate such responsibilities to any such officer
for Awards granted to an Employee who is considered an Insider; (ii) the resolution providing such authorization sets
forth the total number of Awards such officer(s) may grant; and (iii) the officer(s) shall report periodically to the
Committee regarding the nature and scope of the Awards granted pursuant to the authority delegated.
|
Article 4.
|
Shares Subject
to this Plan and Maximum Awards
|
4.1 Number of Shares Available
for Awards and Maximum Amount of Non-Share Awards.
Subject to adjustment as provided in Section 4.3:
|
(a)
|
The maximum number of Shares available for issuance to Participants under this Plan is 75,000 Shares.
|
|
(b)
|
The maximum aggregate number of Shares that may be issued in the aggregate pursuant to the exercise of
Incentive Stock Options is 75,000 Shares.
|
4.2 Share
Usage. Shares covered by an Award shall only be counted as used to the extent they are actually issued. The number of Shares available
for Awards under this Plan shall be reduced by one Share for each Share covered by such Award or to which such Award relates. Awards that
do not entitle the holder thereof to receive or purchase Shares shall not be counted against the aggregate number of Shares available
for Awards under this Plan. In addition, any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise
without the issuance of such Shares shall be available again for grant under this Plan. In no event, however, will the following Shares
again become available for Awards or increase the number of Shares available for grant under this Plan: (i) Shares tendered by the
Participant in payment of the exercise price of an Option; (ii) Shares withheld from exercised Awards for tax withholding purposes;
(iii) Shares subject to a SAR that are not issued in connection with the settlement of that SAR; and (iv) Shares repurchased
by the Company with proceeds received from the exercise of an Option. The Shares available for issuance under this Plan may consist, in
whole or in part, of authorized and unissued Shares, treasury Shares, or Shares reacquired by the Company in any manner.
4.3 Adjustments
in Authorized Shares. In the event of any corporate event or transaction (including, but not limited to, a change in the
Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization,
separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, or other
distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change
in capital structure, number of outstanding Shares or distribution (other than normal cash dividends) to shareholders of the
Company, or any similar corporate event or transaction, the Committee, in its sole discretion, in order to prevent dilution or
enlargement of Participants’ rights under this Plan, shall substitute or adjust, as applicable, the number and kind of Shares
that may be issued under this Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards,
the Option Price or Grant Price applicable to outstanding Awards, and other value determinations applicable to outstanding
Awards.
The Committee, in its sole discretion,
may also make appropriate adjustments in the terms of any Awards under this Plan to reflect or relate to such changes or distributions
and to modify any other terms of outstanding Awards, including modifications of performance goals and changes in the length of Performance
Periods. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under
this Plan.
Subject to the provisions of Article 18
and notwithstanding anything else herein to the contrary, without affecting the number of Shares reserved or available hereunder, the
Committee may authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition
of property or stock, or reorganization upon such terms and conditions as it may deem appropriate (including, but not limited to, a conversion
of equity awards into Awards under this Plan in a manner consistent with paragraph 53 of FASB Interpretation No. 44), subject to
compliance with the rules under Code Sections 422 and 424, as and where applicable.
|
Article 5.
|
Eligibility
and Participation
|
5.1 Eligibility. Individuals eligible to participate in this Plan include all Employees.
5.2 Actual
Participation. Subject to the provisions of this Plan, the Committee may, from time to time, select from all eligible individuals,
those individuals to whom Awards shall be granted and shall determine, in its sole discretion, the nature of any and all terms permissible
by law, and the amount of each Award.
6.1 Grant
of Options. Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, and upon such
terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion.
6.2 Award
Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the maximum duration of
the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable,
and such other provisions as the Committee shall determine which are not inconsistent with the terms of this Plan. The Award Agreement
also shall specify whether the Option is intended to be an ISO or a NQSO.
6.3 Option
Price. The Option Price for each grant of an Option under this Plan shall be determined by
the Committee in its sole discretion and shall be specified in the Award Agreement; provided, however, the Option Price must be at least
equal to one hundred percent (100%) of the Fair Market Value of the Shares as determined on the Grant Date.
6.4 Term
of Options. Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant;
provided, however, no Option shall be exercisable later than the day before the tenth (10th)
anniversary date of its grant. Notwithstanding the foregoing, for Nonqualified Stock Options granted to Participants outside the United
States, the Committee has the authority to grant Nonqualified Stock Options that have a term greater than ten (10) years.
6.5 Exercise
of Options. Subject to Article 13, Options granted under this Article 6 shall be exercisable at such times and be subject
to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same
for each grant or for each Participant.
6.6 Payment.
Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an agent designated
by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures which may be authorized
by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment
for the Shares.
A condition of the issuance
of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any Option
shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery
or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price;
(c) by a cashless (broker-assisted) exercise; (d) by a combination of (a), (b) and/or (c); or (e) any other
method approved or accepted by the Committee in its sole discretion.
Subject to any governing rules or
regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any
applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant’s
request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).
Unless otherwise determined by
the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.
6.7 Restrictions
on Share Transferability. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions
under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed
and/or traded, or under any blue sky or state securities laws applicable to such Shares.
6.8 Termination
of Employment. Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have
the right to exercise the Option following termination of the Participant’s employment or provision of services to the
Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of
the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options
issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.
6.9 Notification of Disqualifying Disposition. If any Participant shall make any disposition of Shares issued pursuant to the exercise
of an ISO under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant
shall notify the Company of such disposition within ten (10) days thereof.
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Article 7.
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Stock Appreciation
Rights
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7.1 Grant of SARs. Subject to the terms and conditions of this Plan, SARs may be granted to Participants at any time and from time
to time as shall be determined by the Committee
Subject to
the terms and conditions of this Plan, the Committee shall have complete discretion in determining the number of SARs granted to each
Participant and, consistent with the provisions of this Plan, in determining the terms and conditions pertaining to such SARs.
The Grant Price for each grant
of an SAR shall be determined by the Committee and shall be specified in the Award Agreement; provided, however, the Grant Price on the
Grant Date must be at least equal to one hundred percent (100%) of the Fair Market Value of the Shares as determined on the Grant Date.
7.2 SAR
Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of the SAR, and such
other provisions as the Committee shall determine.
7.3 Term
of SAR. The term of an SAR granted under this Plan shall be determined by the Committee, in its sole discretion, and except as determined
otherwise by the Committee and specified in the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10th)
anniversary date of its grant. Notwithstanding the foregoing, for SARs granted to Participants outside the United States, the Committee
has the authority to grant SARs that have a term greater than ten (10) years.
7.4
Exercise of SARs. SARs may be exercised upon whatever terms and conditions
the Committee, in its sole discretion, imposes.
7.5 Settlement
of SARs. Upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined
by multiplying:
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(a)
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The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by
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(b)
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The number of Shares with respect to which the SAR is exercised.
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At the discretion of the Committee,
the payment upon SAR exercise may be in cash, Shares, or any combination thereof, or in any other manner approved by the Committee in
its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining
to the grant of the SAR.
7.6 Termination
of Employment. Each Award Agreement shall set forth the extent to which the Participant shall
have the right to exercise the SAR following termination of the Participant’s employment with or provision of services to the Company,
its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee,
shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to this Plan,
and may reflect distinctions based on the reasons for termination.
7.7 Other
Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares received upon exercise of an SAR
granted pursuant to this Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement
that the Participant hold the Shares received upon exercise of an SAR for a specified period of time.
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Article 8.
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Restricted
Stock and Restricted Stock Units
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8.1 Grant
of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of this Plan, the Committee, at any time and from
time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee shall
determine. Restricted Stock Units shall be similar to Restricted Stock except that no Shares are actually awarded to the Participant
on the Grant Date.
8.2 Restricted
Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Award
Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted
Stock Units granted, and such other provisions as the Committee shall determine.
8.3 Other
Restrictions. The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or
Restricted Stock Units granted pursuant to this Plan as it may deem advisable including, without limitation, restrictions based upon
the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals,
time-based restrictions, and/or restrictions under applicable laws or under the requirements of any stock exchange or market upon
which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon
vesting of such Restricted Stock or Restricted Stock Units.
To the extent deemed appropriate
by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until
such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.
Except as
otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable
by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse (including satisfaction
of any applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and
Shares as the Committee, in its sole discretion shall determine.
8.4 Certificate Legend. In addition to any legends placed on certificates pursuant to Section 8.3, each certificate representing
Shares of Restricted Stock granted pursuant to this Plan may bear a legend such as the following or as otherwise determined by the Committee
in its sole discretion:
The sale or transfer of
Shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions
on transfer as set forth in the Texas Pacific Land Corporation 2021 Incentive Plan, and in the associated Award Agreement. A copy of this
Plan and such Award Agreement may be obtained from Texas Pacific Land Corporation.
8.5 Voting
Rights. Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, to the extent
permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder may be
granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction. A Participant shall have
no voting rights with respect to any Restricted Stock Units granted hereunder.
8.6 Termination
of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Restricted
Stock and/or Restricted Stock Units following termination of the Participant’s employment with or provision of services to the
Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted
Stock or Restricted Stock Units issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.
Article 9. Performance
Units/Performance Shares
9.1 Grant
of Performance Units/Performance Shares. Subject to the terms and provisions of this Plan, the Committee, at any time and from time
to time, may grant Performance Units and/or Performance Shares to Participants in such amounts and upon such terms as the Committee shall
determine. Performance Units and Performance Shares that are earned (as described in Section 9.3) may be subject to vesting requirements
as set forth in the applicable Award Agreement.
9.2 Value
of Performance Units/Performance Shares. Each Performance Unit shall have an initial
value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to the
Fair Market Value of a Share on the Grant Date. The Committee shall set performance goals in its discretion which, depending on the
extent to which they are met, will determine the value and/or number of Performance Units/Performance Shares that may be earned by
the Participant.
9.3 Earning
of Performance Units/Performance Shares. Subject to the terms of this Plan, after the applicable Performance Period and vesting period,
if any, have ended, the holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and number of
Performance Units/Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent
to which the corresponding performance goals have been achieved.
9.4 Form and
Timing of Payment of Performance Units/Performance Shares. Payment of earned and vested Performance Units/Performance Shares
shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Committee, in
its sole discretion, may pay earned and vested Performance Units/Performance Shares in the form of cash or in Shares (or in a combination
thereof). Any Shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee
with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.
9.5 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to
retain Performance Units and/or Performance Shares following termination of the Participant’s employment with the Company, its Affiliates,
and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Committee, shall be included
in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Performance Units or Performance Shares
issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.
Article 10. Cash-Based
Awards and Other Stock-Based Awards
10.1 Grant
of Cash-Based Awards. Subject to the terms and provisions of this Plan, the Committee, at any time and from time to time, may grant
Cash-Based Awards to Participants in such amounts and upon such terms as the Committee may determine.
10.2 Other
Stock-Based Awards. The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms
of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions,
as the Committee shall determine. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise
of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable
local laws of jurisdictions other than the United States.
10.3 Value
of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a payment amount or payment range as determined by
the Committee. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee.
The Committee may establish performance goals in its discretion. If the Committee exercises its discretion to establish performance goals,
the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent
to which the performance goals are met.
10.4 Payment
of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award
shall be made in accordance with the terms of the Award, in cash or Shares as the Committee determines.
10.5 Termination
of Employment. The Committee shall determine the extent to which the Participant shall have
the right to receive Cash-Based Awards or Other Stock-Based Awards following termination of the Participant’s employment with or
provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined
in the sole discretion of the Committee, such provisions may be included in an agreement entered into with each Participant, but need
not be uniform among all Awards of Cash-Based Awards or Other Stock-Based Awards issued pursuant to this Plan, and may reflect distinctions
based on the reasons for termination.
Article 11. Transferability
of Awards
11.1 Transferability.
Except as provided in Section 11.2 below, during a Participant’s lifetime, their
Awards shall be exercisable only by the Participant. Awards shall not be transferable other than by will or the laws of descent and distribution;
no Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind; and any purported transfer in violation
hereof shall be null and void. The Committee may establish such procedures as it deems appropriate for a Participant to designate a beneficiary
to whom any amounts payable or Shares deliverable in the event of, or following, the Participant’s death, may be provided.
11.2 Committee
Action. The Committee may, in its discretion, determine that notwithstanding Section 11.1, any or all Awards (other than ISOs)
shall be transferable to and exercisable by such transferees, and subject to such terms and conditions, as the Committee may deem appropriate;
provided, however, no Award may be transferred for value (as defined in the General Instructions to Form S-8).
Article 12. Performance
Measures
12.1 Performance
Measures. The Committee shall have full discretionary authority to select Performance Measures and related performance goals upon
which payment or vesting of an Award depends. Performance Measures may relate to financial metrics, non-financial metrics, GAAP and non-GAAP
metrics, business and individual objectives or any other performance metrics that the Committee deems appropriate.
12.2 Evaluation
of Performance. The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following
events that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the
effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization
and restructuring programs, (e) extraordinary nonrecurring items as described in management’s discussion and analysis of financial
condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year, (f) acquisitions
or divestitures, and (g) foreign exchange gains and losses.
12.3 Adjustment
of Performance-Based Compensation. The Committee shall retain the discretion to adjust such Awards upward or downward, either on a
formula or discretionary basis or any combination, as the Committee determines.
Article 13. Minimum
Vesting of Share-Based Awards
Notwithstanding
any other provision of this Plan to the contrary, Awards granted pursuant to Article 6, 7, 8, 9 or 10 of this Plan shall be subject
to a minimum vesting period of at least one (1) year, provided, however, (a) such vesting may be cliff or graded
(starting no earlier than one (1) year after grant), (b) the Committee may provide for earlier vesting as specified in an Award
Agreement, and (c) no more than five percent (5%) of the maximum number of Shares authorized for issuance under this Plan pursuant
to Section 4.1(a) may be granted with a minimum vesting period of less than one (1) year.
Article 14. Dividend
Equivalents
Any Participant selected by
the Committee may be granted dividend equivalents based on the dividends declared on Shares that are subject to any Award, to be credited
as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests or expires,
as determined by the Committee. Such dividend equivalents shall be converted to cash or additional Shares by such formula and at such
time and subject to such limitations as may be determined by the Committee. Notwithstanding the foregoing, for all Awards, the payment
of dividends and dividend equivalents prior to an Award becoming vested shall be prohibited, and the Committee shall determine the extent
to which dividends and dividend equivalents may accrue during the vesting period and become payable upon vesting.
Article 15. Beneficiary
Designation
Each Participant under this Plan
may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under
this Plan is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant
in writing with the Company, or the Company’s designated agent, during the Participant’s lifetime. In the absence of any such
beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participant’s death shall be paid to or
exercised by the Participant’s executor, administrator, or legal representative on behalf of the Participant’s estate.
Article 16. Rights
of Participants
16.1 Employment. Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its
Affiliates, and/or its Subsidiaries, to terminate any Participant’s employment at any time or for any reason not prohibited by law,
nor confer upon any Participant any right to continue his employment for any specified period of time.
Neither an Award nor any benefits
arising under this Plan shall constitute an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly,
subject to Articles 3 and 18, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion
of the Committee without giving rise to any liability on the part of the Company, its Affiliates or Subsidiaries, or the Committee.
16.2 Participation.
No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected
to receive a future Award.
16.3 Rights
as a Shareholder. Except as otherwise provided herein, a Participant shall have none of the rights of a shareholder with respect
to Shares covered by any Award until the Participant becomes the record holder of such Shares.
Article 17. Change
of Control
17.1 Change of Control of the Company. Notwithstanding any other provision of this Plan to the contrary, the provisions of this
Article 17 shall apply in the event of a Change of Control, unless otherwise determined by the Committee in connection with the grant
of an Award as reflected in the applicable Award Agreement or other agreement between the Participant and the Company or a subsidiary
or Affiliate.
(a) If,
upon a Change of Control, a Participant receives a new Award which qualifies as a “Replacement Award” (as defined below),
the Award shall continue subject to the terms of the Replacement Award.
(b) If,
upon a Change of Control that results in the Company’s Shares no longer being traded on the New York Stock Exchange or another established
securities market and no Replacement Award is granted to a Participant, the unvested portion of an Award whose vesting is based only on
a service requirement shall become immediately vested and exercisable, as applicable, upon the Change of Control.
(c) Notwithstanding
subparagraph (a) and except as may be otherwise provided in an Award Agreement, upon a Change of Control, with respect to Awards
that are Performance Shares or Performance Units issued pursuant to Article 9 of this Plan, a pro-rata portion of the Award shall
be immediately earned, vested and payable; such portion shall be determined based on the portion of the Performance Period that has elapsed
as of (i) the date of the Change of Control, if the Performance Measure is based on stock price, or (ii) the end of the last
full calendar quarter preceding or commensurate with the date of the Change of Control if the Performance Measure is not based on stock
price (in each case, the “Adjusted Measurement Date”). The Award amount that will be considered earned and payable
will be calculated based on the higher of target or actual performance measured as of the Adjusted Measurement Date. To the extent any
earned Awards that are Performance Shares or Performance Units have not been paid prior to the Change of Control because they are subject
to vesting, such earned but unvested Awards shall become immediately vested, and payable upon the Change of Control.
(d) Except
as provided in subparagraph (c) or as otherwise provided in an Award Agreement, if, following a Change of Control, the Company’s
Shares continue to be traded on the New York Stock Exchange or another established securities market, outstanding Awards shall continue
in effect and be treated as Replacement Awards as described in subparagraph (a).
(e) Notwithstanding
any of subparagraphs (a), (b) or (d) of this Section 17.1, the Committee may, in its sole discretion, determine that any
or all outstanding Awards granted under this Plan, whether or not exercisable, will be canceled and terminated, and that in connection
with such cancellation and termination, the holder of such Award may receive for each Share of Common Stock subject to such Awards a
cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities equivalent to such
cash payment) equal to the difference, if any, between the consideration received by shareholders of the Company in respect of a Share
of Common Stock in connection with such transaction and the purchase price per share, if any, under the Award multiplied by the number
of Shares of Common Stock subject to such Award; provided that if such product is zero or less or to the extent that the Award is not
then exercisable, the Awards will be canceled and terminated without payment therefor.
17.2 Replacement Awards. An Award shall be considered a Replacement Award if: (i) it has a value at least equal to the value
of the Award it is replacing as determined by the Committee in its sole discretion; (ii) it relates to publicly traded equity securities
of the Company or its successor in the Change of Control or another entity that is affiliated with the Company or its successor following
the Change of Control; and (iii) its other terms and conditions are not less favorable to the Participant than the terms and conditions
of the Award it is replacing (including the provisions that would apply in the event of a subsequent Change of Control). Without limiting
the generality of the foregoing, the Replacement Award may take the form of a continuation of the Award it is replacing if the requirements
of the preceding sentence are satisfied. The determination of whether the conditions of this Section 17.2 are satisfied shall be
made by the Committee, as constituted immediately before the Change of Control, in its sole discretion.
17.3 Reduction
of Excess Parachute Payments. Except as may be provided in an employment or severance compensation
agreement between the Company and the Participant, if, in connection with a Change of Control, a Participant’s payment of any Awards
will cause the Participant to be liable for federal excise tax under Code Section 4999 levied on certain “excess parachute
payments” as defined in Code Section 280G (“Excise Tax”), then the payments made pursuant to the Awards
shall be reduced (or repaid to the Company, if previously paid or provided) as provided below:
(a) If
the payments due upon of Change of Control under this Plan and any other agreement between a Participant and the Company, exceed 2.99
times the Participant’s “base amount,” as defined in Code Section 280G, a reduced payment amount shall be calculated
by reducing the payments to the minimum extent necessary so that no portion of any payment, as so reduced or repaid, constitutes an excess
parachute payment. If it is determined that any Excise Tax is payable by a Participant, the Participant shall receive either (i) all
payments otherwise due; or (ii) the reduced payment amount described in the preceding sentence, whichever will provide the Participant
with the greater after-tax economic benefit taking into account for these purposes any applicable Excise Tax.
(b) Whether
payments are to be reduced pursuant to this Section 17.3, and the extent to which they are to be so reduced, will be determined solely
by the Company in good faith and the Company will notify the Participant in writing of its determination.
(c) In
no event shall a Participant be entitled to receive any kind of gross-up payment or Excise Tax reimbursement from the Company.
Article 18. Amendment,
Modification, Suspension, and Termination
18.1 Amendment,
Modification, Suspension, and Termination. Subject to Section 18.3, the Committee may,
at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan and any Award Agreement in whole or in part;
provided, however, that, (i) without the prior approval of the Company’s shareholders and except as provided in Section 4.3,
Options or SARs issued under this Plan will not be repriced, repurchased (including a cash buyout), replaced, or regranted through cancellation,
or by lowering the Option Price of a previously granted Option or the Grant Price of a previously granted SAR, (ii) any amendment
of this Plan must comply with the rules of the NYSE, and (iii) no
material amendment of this Plan shall be made without shareholder approval if shareholder approval is required by law, regulation, or
stock exchange rule.
18.2 Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee may make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described
in Section 4.3 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations,
or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution
or enlargement of the benefits or potential benefits intended to be made available under this Plan. The determination of the Committee
as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.
18.3 Awards
Previously Granted. Notwithstanding any other provision of this Plan to the contrary (other than Section 18.4), no termination,
amendment, suspension, or modification of this Plan or an Award Agreement shall adversely affect in any material way any Award previously
granted under this Plan, without the written consent of the Participant holding such Award.
18.4 Amendment to Conform to Law. Notwithstanding any other provision of this Plan to the contrary, the Committee may amend this
Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming
this Plan or an Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to,
Code Section 409A), and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan,
a Participant agrees to any amendment made pursuant to this Section 18.4 to any Award granted under this Plan without further consideration
or action.
Article 19. Withholding
19.1 Tax
Withholding. The Company shall have the power and the right to deduct or withhold from any amounts due and owing to the Participant,
or require a Participant to remit to the Company, up to the maximum statutory amount to satisfy federal, state, and local taxes, domestic
or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.
19.2 Share
Withholding. With respect to withholding required upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, or
upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of an Award granted
hereunder, the Committee may establish provisions in the applicable Award Agreements to satisfy the withholding requirement, in whole
or in part, by having the Company withhold whole Shares having a Fair Market Value on the date the tax is to be determined up to the maximum
statutory total tax withholding that could be imposed on the transaction.
Article 20. Successors
All
obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company,
regardless of whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise,
of all or substantially all of the business and/or assets of the Company.
Article 21. General
Provisions
21.1 Forfeiture
Events. Any Awards granted under this Plan will be subject to recoupment in accordance with any clawback policy that the Company
currently has in effect, or is required to adopt or modify, pursuant to the listing standards of any national securities exchange or
association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer
Protection Act or the Sarbanes-Oxley Act of 2002, or other applicable law (“Clawback Policy”). In addition, the Committee
or the Board may impose such clawback, recovery or recoupment provisions in an Award Agreement as the Committee or the Board determines
necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired Shares or other cash or
property as set forth in the Award Agreement. No recovery of compensation under this Section will be an event giving rise to a right
to resign for “good reason” or “constructive termination” (or similar term) under any agreement or otherwise
with the Company.
21.2 Legend.
The certificates for Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer of such
Shares.
21.3 Gender
and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural
shall include the singular, and the singular shall include the plural.
21.4 Severability.
In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
21.5 Requirements
of Law. The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities exchanges as may be required.
21.6 Delivery
of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan prior to:
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(a)
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Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable;
and
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(b)
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Completion of any registration or other qualification of the Shares under any applicable national or foreign
law or ruling of any governmental body that the Company determines to be necessary or advisable.
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21.7 Inability
to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company
of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
21.8 Investment
Representations. The Committee may require any individual receiving Shares pursuant to an Award under this Plan to represent and warrant
in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.
21.9 Employees
Based Outside the United States. Notwithstanding any provision of this Plan to the contrary, in order to comply with the laws in other
countries in which the Company, its Affiliates, and/or its Subsidiaries operate or have Employees, the Committee, in its sole discretion,
shall have the power and authority to:
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(a)
|
Determine which Affiliates and Subsidiaries shall be covered by this Plan;
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(b)
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Determine which Employees outside the United States are eligible to participate in this Plan;
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(c)
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Modify the terms and conditions of any Award granted to Employees outside the United States to comply
with applicable foreign laws;
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(d)
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Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable.
Any subplans and modifications to Plan terms and procedures established under this Section 21.9 by the Committee shall be attached
to this Plan document as appendices; and
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(e)
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Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply
with any necessary local government regulatory exemptions or approvals.
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Notwithstanding the above, the
Committee may not take any actions hereunder, and no Awards shall be granted, that would violate applicable law.
21.10 Uncertificated Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares,
the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of
any stock exchange.
21.11 Unfunded
Plan. Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries,
and/or its Affiliates may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company
and any Participant, beneficiary, legal representative, or any other individual. To the extent that any individual acquires a right to
receive payments from the Company, its Subsidiaries, and/or its Affiliates under this Plan, such right shall be no greater than the right
of an unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as the case may be. All payments to be made hereunder
shall be paid from the general funds of the Company, a Subsidiary, or an Affiliate, as the case may be and no special or separate fund
shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this
Plan.
21.12 No
Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine
whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any
rights thereto shall be forfeited or otherwise eliminated.
21.13 Retirement
and Welfare Plans. Neither Awards made under this Plan nor Shares or cash paid pursuant to such Awards may be included as “compensation”
for purposes of computing the benefits payable to any Participant under the Company’s or any Subsidiary’s or Affiliate’s
retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation
shall be taken into account in computing a Participant’s benefit.
21.14 Deferred
Compensation. If any Award would be considered deferred compensation as defined under Code Section 409A and if this Plan fails
to meet the requirements of Code Section 409A with respect to such Award, then such Award shall be null and void. However, the Committee
may permit deferrals of compensation pursuant to the terms of a Participant’s Award Agreement, a separate plan or a subplan which
meets the requirements of Code Section 409A and any related guidance. Additionally, to the extent any Award is subject to Code Section 409A,
notwithstanding any provision herein to the contrary, this Plan does not permit the acceleration or delay of the time or schedule of any
distribution related to such Award, except as permitted by Code Section 409A, the regulations thereunder, and/or the Secretary of
the United States Treasury.
21.15 Nonexclusivity
of this Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee
to adopt such other compensation arrangements as it may deem desirable for any Participant.
21.16 No
Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s
or a Subsidiary’s or an Affiliate’s right or power to make adjustments, reclassifications, reorganizations, or changes of
its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business
or assets; or (ii) limit the right or power of the Company or a Subsidiary or an Affiliate to take any action which such entity deems
to be necessary or appropriate.
21.17 Governing
Law. This Plan shall be governed by the laws of the State of Texas, without regard to choice-of-law principles. The Participants
consent to personal and exclusive jurisdiction and venue Dallas County in the State of Texas. Any controversy or claim arising out of
or relating to (i) a Participant’s employment with the Company or a Subsidiary or Affiliate and/or (ii) the Plan, or
the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Employment
Arbitration Rules before a single arbitrator in Dallas, Texas, and judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The Company and the Participant will each be responsible for their own attorneys’ fees
and expenses incurred in connection with any such arbitration. The decision arrived at by the arbitrator shall be binding upon all parties
to the arbitration and no appeal shall lie therefrom, except as provided by the Federal Arbitration Act. These arbitration procedures
are intended to be the exclusive method of resolving any claim or dispute arising out of or related to this Plan, including the applicability
of this Section; provided, however, that any party seeking injunctive relief in connection with a breach or anticipated breach of the
Plan will do so in a state or federal court of competent jurisdiction within Dallas County in the State of Texas.
As evidence of its adoption of
this Plan, the Company has caused this document to be executed by its duly authorized officer the_____day of_____________, 2021.
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TEXAS PACIFIC LAND CORPORATION
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By:
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Name:
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Title:
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APPENDIX B
Texas
Pacific Land Corporation
2021
Non-Employee Director Stock and
Deferred
Compensation Plan
TABLE OF CONTENTS
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Page
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ARTICLE 1.
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ESTABLISHMENT,
PURPOSE, AND DURATION
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3
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ARTICLE 2.
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DEFINITIONS
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3
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ARTICLE 3.
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ADMINISTRATION
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6
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ARTICLE 4.
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SHARES
SUBJECT TO THIS PLAN AND MAXIMUM AWARDS
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7
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ARTICLE 5.
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ELIGIBILITY
AND PARTICIPATION
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7
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ARTICLE 6.
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GRANTS OF SHARES
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8
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ARTICLE 7.
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DEFERRAL
ELECTIONS
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10
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ARTICLE 8.
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DISTRIBUTIONS
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12
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ARTICLE 9.
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HARDSHIP
DISTRIBUTIONS
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12
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ARTICLE 10.
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BENEFICIARY
DESIGNATION
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13
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ARTICLE 11.
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SUCCESSORS
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13
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ARTICLE 12.
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AMENDMENT,
MODIFICATION, SUSPENSION, AND TERMINATION
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13
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ARTICLE 13.
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GENERAL
PROVISIONS
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Texas
Pacific Land Corporation
2021
Non-Employee Director Stock and
Deferred Compensation Plan
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Article 1
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Establishment,
Purpose, and Duration
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1.1 Establishment. Texas Pacific Land Corporation (the “Company”), establishes a compensation plan to be known
as the Texas Pacific Land Corporation Non-Employee Director Stock and Deferred Compensation Plan (this “Plan”), in
accordance with the terms and conditions of the Plan as set forth in this document.
This Plan’s effective date
is the date this Plan is approved by the Company’s shareholders at an Annual Meeting (the “Effective Date”),
and this Plan shall remain in effect as provided in Section 1.3 hereof.
1.2 Purpose
of this Plan. The purpose of this Plan is to enable the Company to pay part of the compensation of its non-employee Directors in shares
of the Company’s common stock and to allow the Company’s non-employee Directors to defer some or all of their directors’
fees.
1.3 Duration
of this Plan. Unless sooner terminated as provided herein, this Plan shall terminate ten years from the Effective Date. After this
Plan is terminated, no Stock Compensation may be granted but Stock Compensation previously granted shall remain outstanding in accordance
with its applicable terms and conditions and this Plan’s terms and conditions.
Whenever used in this Plan, the
following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.
2.1 “Administrator”
means the General Counsel of the Company.
2.2 “Affiliate”
shall mean any corporation or other entity (including, but not limited to, a partnership or a limited liability company), that is affiliated
with the Company through stock or equity ownership or otherwise, and is designated as an Affiliate for purposes of this Plan by the Administrator.
2.3 “Annual
Grant Limit” and “Annual Grant Limits” shall mean the number of shares or dollar amounts set forth in Section 4.1.
2.4 “Annual Meeting” means the annual meeting of the shareholders of the Company held in the relevant year.
2.5 “Beneficiary”
or “Beneficiaries” means any person or persons designated on a Beneficiary Designation Form by a Director
as allowed in Article 10 to receive Stock Compensation and unpaid Deferred Benefits under this Plan. If there is no valid designation
by the Director, or if the designated Beneficiary or Beneficiaries fail to survive the Director or otherwise fail to take the benefit,
the Director’s Beneficiary shall be the first of the following who survives the Director: (i) a Director’s spouse (the person
legally married to the Director when the Director dies); (ii) the Director’s children in equal shares, and (iii) the
Director’s estate.
2.6 “Beneficiary
Designation Form” means a form acceptable to the Administrator or its designee used by a Director pursuant to Article 10
hereof to name their Beneficiary or Beneficiaries who will receive their Stock Compensation and unpaid Deferred Benefits under this Plan,
if any, when they dies.
2.7 “Board”
or “Board of Directors” means the Board of Directors of the Company.
2.8 “Cash
Compensation” means any retainers or other fees payable to a Director in cash in consideration for services performed as a Director.
2.9 “Cash
Distribution Date” means the date specified under Section 7.3(b)(ii) used for determining interest, earnings and losses
accrued on a Deferred Cash Benefit.
2.10 “Change
in Control” means the occurrence of any of the following events:
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(i)
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Any Person, other than (x) a fiduciary
holding securities under an employee benefit plan of the Company or any Subsidiary or Affiliate,
or (y) any corporation owned, directly or indirectly, by shareholders of the Company
in substantially the same proportions as their ownership of the Company’s Shares becomes
the Beneficial Owner, directly or indirectly, of securities of the Company representing 30%
or more of the total voting power represented by the Company’s then outstanding voting securities;
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(ii)
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the sale
of disposition by the Company of all or substantially all of the Company’s assets;
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(iii)
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the members of the Board of Directors
as of the Effective Date (the “Incumbent Directors”) and any successor
director whose appointment is endorsed by the Incumbent Directors or any such duly-endorsed
successor director cease to constitute a majority of the Board; or
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(iv)
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a merger
or consolidation of the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or its parent) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or such surviving
entity or its parent outstanding immediately after such merger or consolidation.
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For purposes of this section, the following terms have
the meanings set forth below:
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(a)
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“Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3
of the General Rules and Regulations under the Exchange Act.
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(b)
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“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
or any successor act thereto.
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(c)
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“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used
in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.
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2.11 “Code”
means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the
Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.
2.12 “Common
Stock” means the common stock of the Company.
2.13 “Company”
or “Corporation” means Texas Pacific Land Corporation and any successor thereto as provided in Article 11
herein.
2.14 “Compensation
Year” means the 12-month period commencing on January 1st
each year.
2.15 “Deferral
Election” means a Director’s election to defer Cash Compensation or Stock Compensation granted or earned during the Deferral
Year.
2.16 “Deferral
Election Form” means any instrument, whether in paper, electronic or such other form or manner prescribed by the Administrator,
governed by the provisions of Article 7 of this Plan, including the portion that is the Distribution Election Form and the related
Beneficiary Designation Form that applies to all of that Director’s Deferred Benefits under the Plan.
2.17 “Deferral
Year” means a calendar year for which a Director has an operative Deferral Election Form.
2.18 “Deferred
Benefit” means either a Deferred Cash Benefit or a Deferred Stock Benefit under the Plan for a Director who has submitted an
operative Deferral Election Form pursuant to Article 7 of this Plan.
2.19 “Deferred
Cash Account” means that bookkeeping record established for each Director who elects to defer some or all of their Cash Compensation
for a Compensation Year. A Deferred Cash Account is established only for purposes of measuring a Deferred Cash Benefit and not to segregate
assets or to identify assets that may or must be used to satisfy a Deferred Cash Benefit. A Deferred Cash Account will be credited with
the Director’s Cash Compensation deferred as a Deferred Cash Benefit according to a Deferral Election Form and according to
Section 7.3 of this Plan. A Deferred Cash Account will be credited periodically with interest, earnings and losses pursuant to Section 7.3(b) of
this Plan.
2.20 “Deferred
Cash Benefit” means the Cash Compensation that a Director elects to defer under Article 7, that results in payments governed
by Section 7.3 and Article 8 of this Plan.
2.21 “Deferred
Stock Account” means that bookkeeping record established for each Director who elects
to defer some or all of their Stock Compensation for a Compensation Year. A Deferred Stock Account is established only for purposes of
measuring a Deferred Stock Benefit and not to segregate assets or to identify assets that may or must be used to satisfy a Deferred Stock
Benefit. A Deferred Stock Account will be credited with the Director’s Stock Compensation deferred as a Deferred Stock Benefit according
to a Deferral Election Form and according to Section 7.4 of this Plan. A Deferred Stock Account will be credited periodically
with amounts determined under Section 7.4(b) of this Plan.
2.22 “Deferred
Stock Benefit” means Stock Compensation that a Director elects to defer under Article 7 that results in payments governed
by Section 7.4 and Article 8 of this Plan.
2.23 “Director”
means each director of the Company who is not an employee of the Company.
2.24 “Disabled”
or “Disability” means a Director’s inability to engage in any substantial gainful activity because of any
medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected
to last, for a continuous period of twelve (12) months or longer.
2.25 “Distribution
Election Form” means that part of a Deferral Election Form used by a Director according to this Plan to establish the
duration of deferral and the form of payments (lump sum or a designated number of annual installments) of a Deferred Benefit. If a Deferred
Benefit has no Distribution Election Form that is operative according to Article 7 of this Plan, distribution of that Deferred
Benefit is governed by Article 8 of this Plan.
2.26 “Effective
Date” has the meaning set forth in Section 1.1.
2.27 “Election
Date” means the date established by this Plan as the date before which a Director must submit a valid Deferral Election Form to
the Administrator. For each Deferral Year, the Election Date is December 31 of the preceding calendar year. However, for an individual
who becomes a Director during a Deferral Year, the Election Date is the thirtieth day following the date they become a Director. The
Administrator may set an earlier date as the Election Date for any Deferral Year.
2.28 “Fair
Market Value” means, on any given date, the closing price of a Share as reported on the New York Stock Exchange (“NYSE”)
composite tape on such date, or if Shares were not traded on NYSE on such day, then on the next preceding day that Shares were traded
on NYSE; in the event Shares are traded only on an exchange other than NYSE, references herein to NYSE shall mean such other exchange.
The Company may use an alternate method of determining the value of Shares for accounting or any other purpose.
2.29 “Financial
Emergency” means a severe financial hardship to the Director resulting from an illness or accident of the Director, the Director’s
spouse, or the Director’s dependent; loss of the Director’s property due to casualty; or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Director and qualifying as an Unforeseeable Emergency for purposes
of Code Section 409A.
2.30 “Grant”
means the grant of Shares made to Directors pursuant to Article 6 of this Plan.
2.31 “Grant
Date” means the date a Grant is made to a Director pursuant to Article 6 of this Plan.
2.32 “Grant
Price” means the Fair Market Value of Shares on the Grant Date.
2.33 “Plan”
means this Texas Pacific Land Corporation 2021 Non-Employee Director Stock and Deferred Compensation Plan.
2.34 “Share”
means a share of Common Stock of the Company.
2.35 “Stock Compensation” means Shares of stock issued to the Directors as part of their annual compensation.
2.36 “Subsidiary”
means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly,
a proprietary interest of more than fifty percent (50%) by reason of stock ownership or otherwise.
2.37 “Terminate”,
“Terminating”, or “Termination”, with respect to a Director, means cessation of their relationship
with the Company as a director whether by death, Disability or severance for any other reason provided there is a “separation from
service” for purposes of Code Section 409A.
3.1 General.
The Administrator shall be responsible for administering this Plan, subject to this Article 3 and the other provisions of this Plan.
The Administrator may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an employee, and
the Administrator, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of
any such individuals. All actions taken and all interpretations and determinations made by the Administrator shall be final and binding
upon the Directors, the Company, and all other interested individuals.
3.2 Authority of the Administrator. The Administrator shall have full and exclusive discretionary power to interpret the
terms and the intent of this Plan and any agreement or document ancillary to or in connection with this Plan, to determine
eligibility for Grants and the right to make deferrals, and to adopt such rules, regulations, forms, instruments, and guidelines for
administering this Plan as the Administrator may deem necessary or proper. Such authority shall include, but not be limited to,
determining Grant recipients, establishing Grant and deferral terms and conditions, construing any ambiguous provision of the Plan,
and, subject to Article 12, adopting modifications and amendments to this Plan, including without limitation, any that are
necessary to comply with applicable laws.
3.3 Delegation. The Administrator may delegate to one or more officers of the Company, and/or its Subsidiaries and Affiliates or
to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Administrator or any individuals
to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility
the Administrator or such individuals may have under this Plan.
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Article 4
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Shares Subject
to this Plan and Maximum Grants
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4.1
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Number of Shares Available for Grants.
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(a)
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Subject to adjustment as provided in Section 4.3, the maximum number of Shares available for issuance
to Directors under this Plan is 10,000 Shares.
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(b)
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The aggregate Fair Market Value (determined as of the Grant Date) of Shares that may be issued as Stock Compensation Grants under
Article 6 of this Plan to a Director in any Compensation Year shall not exceed $500,000.
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4.2 Share
Usage. Shares covered by a Grant shall only be counted as used to the extent they are actually issued. Any Shares related to Grants
or Deferred Stock which terminate by forfeiture, cancellation, or otherwise shall be available again for grant under this Plan. The Shares
available for issuance under this Plan may consist, in whole or in part, of authorized and unissued Shares, treasury Shares, or Shares
reacquired by the Company in any manner.
4.3 Adjustments
in Authorized Shares. In the event of any corporate event or transaction (including, but not
limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization,
recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off,
or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like
change in capital structure, number of outstanding Shares or distribution (other than normal cash dividends) to shareholders of the Company,
or any similar corporate event or transaction, the Administrator, in its sole discretion, in order to prevent dilution or enlargement
of Directors’ rights under this Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may
be issued under this Plan, the number and kind of Shares subject to outstanding Grants, the Annual Grant Limits, and other value determinations
applicable to outstanding Grants.
The Administrator, in its sole discretion,
may also make appropriate adjustments in the terms of any Grants under this Plan to reflect or relate to such changes or distributions
and to modify any other terms of outstanding Grants. The determination of the Administrator as to the foregoing adjustments, if any, shall
be conclusive and binding on Directors under this Plan
Subject to the provisions of Section 6.7
and notwithstanding anything else herein to the contrary, without affecting the number of Shares reserved or available hereunder, the
Administrator may authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition
of property or stock, or reorganization upon such terms and conditions as it may deem appropriate.
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Article 5
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Eligibility
and Participation
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5.1 Eligibility. Each Director of the Corporation shall be eligible to participate in this Plan until the Director is no longer
serving as a non-employee director of the Corporation.
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Article 6
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Grants of
Shares
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6.1 Annual
Grants. As of the first date of each Compensation Year, the Company will grant to each Director
a number of Shares for that Compensation Year. The number of Shares granted to each Director shall be determined by (i)
dividing the amount of each Director’s cash retainer for the Compensation Year by the Fair Market Value of the Shares on the first
day of the Compensation Year (which date is the Grant Date for purposes of this Plan), and (ii) rounding such number of Shares up
to the nearest whole Share, provided, however, that the Corporation may revise the foregoing
formula for any year without shareholder approval, subject to the Plan’s overall Share limits. Except as provided herein, the Shares
shall remain unvested and forfeitable.
6.2 Partial
Year Directors. For individuals who become Directors after the first day of the Compensation Year, such Directors shall receive a
pro-rata number of Shares for the Compensation Year based on the number of days remaining in the Compensation Year. The number of Shares
granted under this Section 6.2 shall be determined pursuant to Section 6.1 but based on the Fair Market Value of the Shares
on the date the Director becomes a Director, which date shall be the Grant Date with respect to such Shares.
6.3 Limits
on Shares. The Administrator shall have the authority to increase the number of Shares granted to each Director during a Compensation
Year but in no event shall the amount granted exceed the limits set forth in Article 4 above.
6.4 Vesting
of Shares. Subject to Section 6.7, each Director’s Shares pursuant to a Grant (including the Shares of Directors whose
Grants were subject to Section 6.2) shall become vested and non-forfeitable on the first anniversary of the Grant Date. Notwithstanding
the foregoing, the Administrator may determine each year, in its sole discretion, that a different vesting schedule shall apply to the
Grant for that year.
6.5 Death
or Disability Before Vesting. Subject to Section 6.7, if a Director dies or becomes Disabled while they are a Director, all Shares
that are forfeitable shall become non-forfeitable as of the date of the Director’s death or Disability.
6.6 Forfeiture
of Nonvested Shares. (a) Subject to paragraph (b) and Sections 6.5 and 6.7, all Shares that are forfeitable shall be forfeited
if a Director Terminates their service as a director before the Shares become vested under Section 6.4.
(b) Notwithstanding paragraph
(a) hereof, a Director who elects not to stand for reelection as a Director for the following Compensation Year shall vest in a pro-rata
portion of their outstanding Grants at the annual meeting at which their service as a Director Terminates. For the avoidance of doubt,
if such Director’s service Terminates prior to such annual meeting for any reason, the Director shall not be entitled to pro-rata
accelerated vesting pursuant to this Section 6.6(b).
6.7 Change in Control of the Company. Notwithstanding any other provision of this Plan to the contrary, the provisions of this
Section 6.7 shall apply in the event of a Change in Control, unless otherwise determined by the Administrator in connection with
a Grant.
(a) If,
upon a Change of Control, a Director receives a new Grant which qualifies as a “Replacement Grant” (as defined below), the
Award shall continue subject to the terms of the Replacement Grant.
(b) If,
upon a Change of Control that results in the Company’s Shares no longer being traded on the New York Stock Exchange or another
established securities market and no Replacement Grant is granted to a Director, the unvested portion of a Grant shall become immediately
vested upon the Change of Control.
(c) If,
following a Change of Control, the Company’s Shares continue to be traded on the New York Stock Exchange or another
established securities market, outstanding Grants shall continue in effect and be treated as Replacement Awards as described in
subparagraph (a).
(d) Notwithstanding
any of subparagraphs (a), (b) or (c) of this Section 6.7, the Administrator may, in its sole discretion, determine that
any or all outstanding Grants granted under this Plan will be canceled and terminated, and that in connection with such cancellation and
termination, the holder of such Grant may receive for each Share of Common Stock subject to such Grant a cash payment (or the delivery
of shares of stock, other securities or a combination of cash, stock and securities equivalent to such cash payment) equal to the consideration
received by shareholders of the Company in respect of a Share of Common Stock in connection with such transaction multiplied by the number
of Shares of Common Stock subject to such Grant.
(e) A
Grant shall be considered a Replacement Grant if: (i) it has a value at least equal to the value of the Grant it is replacing as
determined by the Administrator in its sole discretion; (ii) it relates to publicly traded equity securities of the Company or its
successor in the Change of Control or another entity that is affiliated with the Company or its successor following the Change of Control;
and (iii) its other terms and conditions are not less favorable to the Director than the terms and conditions of the Grant it is
replacing (including the provisions that would apply in the event of a subsequent Change of Control). Without limiting the generality
of the foregoing, the Replacement Grant may take the form of a continuation of the Grant it is replacing if the requirements of the preceding
sentence are satisfied. The determination of whether the conditions of this Section 6.7 are satisfied shall be made by the Administrator
in its sole discretion.
(f) With
respect to Grants for which a Deferral Election has been made under Article 7, such Grants shall vest pursuant to paragraph (a) but
the Deferral Election with respect to such Grants shall remain in place.
6.8 Dividends. On and after the Grant Date, Directors shall receive, as additional cash payments, amounts representing the cash
dividends paid on their Shares. If, however, a Director elects to defer their Stock Compensation pursuant to Section 7.1(c) of
this Plan, dividend equivalents shall accrue in the Deferred Stock Account from the Grant Date.
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Article 7
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Deferral
Elections
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7.1 Right to Elect Deferrals. A Director may elect a Deferred Benefit for any Deferral Year if they are a Director at the beginning
of that Deferral Year or they become a Director during that Deferral Year.
(a) A Deferral
Election is valid when a Deferral Election Form is completed, signed by the electing Director, and received by the Administrator.
Deferral Elections are governed by the provisions of this Article 7.
(b) Before
each Deferral Year’s Election Date, each Director will be provided with a Deferral Election Form. Under the Deferral Election Form for
a single Deferral Year, a Director may elect on or before the Election Date to defer the receipt of all or part of their Cash Compensation
(in 10% multiples) for the Deferral Year, that will be earned and payable after the Election Date.
(c) Before
each Deferral Year’s Election Date, a Director may also elect to defer the receipt of all or part of their Stock Compensation granted
during the Deferral Year (in 10% multiples).
(d) A Director’s
Deferral of Cash Compensation shall only be deferred as a Deferred Cash Benefit. A Director’s deferral of Stock Compensation shall
only be deferred as a Deferred Stock Benefit. A Director may not elect to convert a Deferred Cash Benefit to a Deferred Stock Benefit
or to convert a Deferred Stock Benefit to a Deferred Cash Benefit.
(e) Each
Distribution Election Form is part of the Deferral Election Form on which it appears or to which it is related. The Administrator
may allow a Director to file one Distribution Election Form for all of their Deferred Stock Benefits, all of their Deferred Cash
Benefits or all of their Deferred Benefits. The Administrator may allow a Director to file multiple Distribution Election Forms that relate
to any or all of their Deferred Benefits for one or more Deferral Years. The provisions of Article 8 shall apply to any Deferred
Benefit for which there is no operative Distribution Election Form.
(f) Prior
to the Election Date, the Administrator may (i) reject any Deferral Election Form or Distribution Election Form for any
or no reason and (ii) modify any Distribution Election Form to the extent necessary to comply with any federal tax or securities
laws or regulations. However, the Administrator’s rejection of any Deferral Election Form or Distribution Election Form, and
the Administrator’s modification of any Distribution Election Form, must be based upon action taken without regard to any vote of
the Director whose Deferral Election Form or Distribution Election Form is under consideration, and the Administrator’s
rejections must be made on a uniform basis with respect to similarly situated Directors. If the Administrator rejects a Deferral Election
Form, the Director must be paid the amounts such Director would then have been entitled to receive if such Director had not submitted
the rejected Deferral Election Form.
(g) Subject
to the last paragraph of Section 8.1(c) hereof, a Director may not revise or revoke a Deferral Election Form or Distribution
Election Form after the Deferral Year begins. Any revocation of a Deferral Election Form or Distribution Election Form before
the beginning of the Deferral Year is the same as a failure to submit a Deferral Election Form or Distribution Election Form. Any
writing signed by a Director expressing an intention to revoke their Deferral Election Form or a related Distribution Election Form and
delivered to the Administrator before the close of business on the relevant Election Date shall constitute a revocation of such form.
(h) The
Plan is unfunded. A Deferred Benefit is at all times a mere contractual obligation of the Company. The Company will not segregate any
funds or assets for Deferred Benefits nor issue any notes or security for the payment of any Deferred Benefit.
(i) A Director
has no control over Deferred Benefits except according to their Deferral Election Forms, Distribution Election Forms, and Beneficiary
Designation Forms, and their right to select hypothetical investment options, if applicable.
(j) A Director’s
Deferred Cash Account and Deferred Stock Account are not subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, and any attempt to do so is void. Deferred Benefits are not subject to attachment or legal process for
a Director’s debts or other obligations. Nothing contained in this Plan gives any Director any interest, lien, or claim against
any specific asset of the Company. A Director or their Beneficiary has no rights to receive Deferred Benefits other than as a general
creditor of the Company.
7.2 Effect
of No Election. A Director who has not submitted a valid Deferral Election Form to the Administrator on or before the relevant
Election Date may not defer their Cash Compensation or Stock Compensation for the applicable Deferral Year. Any Deferred Benefit for which
no valid Deferral Election Form has been submitted before the relevant Election Date, and for which there is no otherwise valid Distribution
Election Form in effect, shall be governed by Article 8 of this Plan.
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7.3
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Deferred Cash Benefits.
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(a) Deferred
Cash Benefits will be allocated to a Deferred Cash Account for each Director and credited with interest, earnings and losses, as applicable,
determined pursuant to subparagraph (b)(i) of this Section 7.3. Deferred Cash Benefits shall be credited to a Director’s
Deferred Cash Account as of the day they would have been paid to such Director but for the applicable Deferral Election.
(b) (i) The
value of a Deferred Cash Account as of any date shall equal the amount of Cash Compensation allocated to such Deferred Cash Account as
of such date, as adjusted for interest, earnings and losses pursuant to this Section 7.3(b). The Board or its designee shall have
the sole discretion to determine how interest, earnings and losses credited to a Director’s Deferred Cash Account will be calculated,
including, without limitation, by specifying an applicable interest rate, tracking the performance of one or more investment option, index
or similar measure, or allowing Directors to allocate their Deferred Cash Benefits among a series of hypothetical investment options,
with such Deferred Cash Benefits to be measured based upon the performance of the investment options selected, reduced by an amount equal
to any investment managers’ and other applicable expenses that would apply to an actual investment in the selected investment option.
(ii) Interest, earnings and
losses shall accrue through the latest date administratively practicable preceding the date of distribution of a Deferred Cash Benefit,
which date is referred to in this Plan as the Cash Distribution Date.
7.4 Deferred
Stock Benefits.
(a) Deferred
Stock Benefits will be allocated to a Deferred Stock Account for each electing Director and credited with earnings and losses in accordance
with subsection (b). A Director’s Deferred Stock Account shall be credited with the same number of shares of Common Stock that,
but for the Director’s Deferral Election, would have been issued to the Director during the applicable Deferral Year under Article 6
of this Plan.
(b) The
value of a Deferred Stock Account as of any date shall equal the Fair Market Value of the Shares allocated to such Deferred Stock Account
on such date. If any dividends are paid with respect to Shares for which a Deferral Election is in effect, the Director’s Deferred
Stock Account will be credited with additional whole or fractional Shares equal to the Fair Market Value of such dividends on the payment
date.
Article
8 Distributions
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8.1
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Time and Form of Payments.
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(a) According
to a Director’s Distribution Election Form, a Deferred Cash Benefit will be distributed in cash and a Deferred Stock Benefit will
be distributed in shares of Common Stock equal to the number of whole shares of Common Stock credited to the Director’s Deferred
Stock Account determined as of the distribution date. However, cash will be paid in lieu of fractional shares of Common Stock credited
to the Director’s Deferred Stock Account.
(b) Deferred
Benefits will be paid in a lump sum unless the Director’s Distribution Election Form specifies annual installment payments
over a period of up to 10 years. A Deferred Benefit payable in installments will continue to accrue additional credits under Plan subsection
7.3(b) or 7.4(b), as applicable, on the unpaid balance of the Deferred Cash Account or Deferred Stock Account, as applicable.
(c) Unless
otherwise specified in a Director’s Distribution Election Form, any lump sum payment will be paid or installment payments will begin
to be paid on the February 15th of the year following the year in which the Director Terminates For distributions that would automatically
be caused under the preceding sentence by a Director’s Termination (other than due to death), the Director may elect on their Distribution
Election Form that payments are to begin:
(i) on
the February 15th of the year following the later of the year in which they
Terminate and the year in which they attain a specified age; or
(ii) on
the February 15th of the year following the year in which they attain a specified
age, regardless of when they Terminate.
For purposes
of these distribution election alternatives, the specified age must be not less than the Director’s age two years from the Election
Date pertaining to the applicable Deferral Year. A Director may amend their Distribution Election Form to postpone the commencement
of benefit payments only if (i) the amendment is made at least twelve months before the date distributions would otherwise have commenced,
(ii) the amended payment date is at least five years after the original payment date, and (iii) the amendment otherwise conforms
to the requirements of the Plan and Code Section 409A.
8.2 Death. Upon a Director’s
death, their Beneficiary will receive the Beneficiary’s portion or remaining portion of the Director’s Deferred Cash Account
and Deferred Stock Account in a lump sum payment (regardless of the time and form of payment elected by the Director) as soon as administratively
feasible following the Director’s death.
Article 9 Hardship
Distributions
(a) At
the request of a Director before or after the Director’s Termination, a Director’s Deferred Benefits under this Plan shall
be paid in the event of a Financial Emergency. An accelerated distribution on account of a Financial Emergency must be limited to the
amount determined by the Administrator to be necessary to satisfy the Financial Emergency plus amounts necessary to pay applicable income
taxes and penalties.
(b) For
purposes of an accelerated distribution under this section, the Deferred Stock Benefit’s value is determined by the value of the
Deferred Stock Account, as set out in Article 7.4(b), at the time of distribution.
(c) Distributions
under this section must first be made from the Director’s Deferred Cash Account before accelerating the distribution of any amount
attributable to a Deferred Stock Benefit.
(d) A distribution
under this section is in lieu of that portion of the Deferred Benefit that would have been paid otherwise. A Deferred Cash Benefit is
adjusted for a distribution under this section by reducing the Director’s Deferred Cash Account by the amount of the distribution.
A Deferred Stock Benefit is adjusted for a distribution under this section by reducing the value of the Director’s Deferred Stock
Account by the amount of the distribution.
Article 10 Beneficiary
Designation
Each Director under this Plan
may, from time to time, name a Beneficiary or Beneficiaries (who may be named contingently or successively) who will receive any Stock
Compensation or unpaid Deferred Benefit under this Plan in case of the Director’s death before their Stock Compensation vests or
their Deferred Benefits are paid. Each such designation shall revoke all prior designations by the same Director, shall be in a form prescribed
by the Administrator, and will be effective only when filed by the Director in writing with the Company during the Director’s lifetime.
In the absence of any such Beneficiary designation, benefits remaining unpaid at the Director’s death shall be paid to the default
Beneficiary.
Article 11 Successors
All obligations
of the Company under this Plan with respect to Grants made hereunder shall be binding on any successor to the Company, whether the existence
of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
Article 12 Amendment,
Modification, Suspension, and Termination
12.1 Amendment,
Modification, Suspension, and Termination. The Administrator may, at any time and from time to time, alter, amend, modify, suspend,
or terminate this Plan in whole or in part; provided, however, that, without the prior approval of the Company’s shareholders, no
such amendment shall increase the number of Shares that may be granted to any Director, except as otherwise described in this Plan, or
increase the total number of Shares that may be granted under the Plan. In addition, any amendment of the Plan must comply with the rules of
the NYSE and no material amendment of this Plan shall be made without shareholder approval if shareholder approval is required by law,
regulation, or stock exchange rule.
12.2 Plan
Termination. Except for a termination of the Plan caused by the determination of the Board that the laws upon which the Plan is based
have changed in a manner that negates the Plan’s objectives, this Plan may not be altered, amended, suspended, or terminated without
the majority consent of all Directors who are Directors if that action would result either in a distribution of all Deferred Benefits
in any manner other than as provided in this Plan or that would result in immediate taxation of Deferred Benefits to Directors.
Upon termination of the Plan, all vested
benefits shall be paid upon the earliest to occur of the following events:
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1.
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Termination and liquidation of the Plan within 12 months of a qualifying corporate dissolution or bankruptcy;
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2.
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Termination and liquidation of the Plan pursuant to irrevocable action of the Company within 30 days before,
or 12 months after, a Change in Control that qualifies as a distribution event under Code Section 409A;
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3.
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A termination and liquidation of the Plan (i) that does not occur proximate to a downturn in the
Company’s financial condition; (ii) where all plans required to be aggregated with the Plan are terminated; (iii) where
no liquidation payments are made for at least 12 months after the Plan is terminated; (iv) where all payments are made by 24 months
after the Plan is terminated; and (v) where the Company does not adopt a new plan of the same type, for at least three years after
the Plan is terminated; or
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4.
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The occurrence of an applicable distribution event pursuant to the other terms of the Plan.
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Distributions made under this
Section 12.2, other than pursuant to paragraph 4 above, shall be paid in the form of a lump sum.
12.3 Adjustment
of Grants Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Administrator may make adjustments in the terms and conditions
of, and the criteria included in, Grants in recognition of unusual or nonrecurring events (including, without limitation, the events described
in Section 4.3 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations,
or accounting principles, whenever the Administrator determines that such adjustments are appropriate in order to prevent unintended dilution
or enlargement of the benefits or potential benefits intended to be made available under this Plan. The determination of the Administrator
as to the foregoing adjustments, if any, shall be conclusive and binding on Directors under this Plan.
12.4 Amendment
to Conform to Law. Notwithstanding any other provision of this Plan to the contrary, the Plan shall be amended, to take effect retroactively
or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan to any present or future law relating to plans
of this or similar nature (including, but not limited to, Code Section 409A), and to the administrative regulations and rulings
promulgated thereunder. By accepting a Grant under this Plan, a Director agrees to any amendment made pursuant to this Section 12.4
to any Grant made under the Plan without further consideration or action.
Article 13 General
Provisions
13.1 Forfeiture
Events. Any Shares granted under this Plan will be subject to recoupment in accordance with any clawback policy that the Company currently
has in effect, or is required to adopt or modify, pursuant to the listing standards of any national securities exchange or association
on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection
Act or the Sarbanes-Oxley Act of 2002, or other applicable law (“Clawback Policy”). In addition, the Committee or the Board
may impose such clawback, recovery or recoupment provisions on any Shares granted under this Plan as the Administrator determines necessary
or appropriate, including but not limited to a reacquisition right in respect of previously acquired Shares or other cash or property.
13.2 Legend.
The certificates for Shares may include any legend which the Administrator deems appropriate to reflect any restrictions on transfer
of such Shares.
13.3 Gender
and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural
shall include the singular, and the singular shall include the plural.
13.4 Non-Assignability.
Deferred Benefits may not be assigned by a Director or Beneficiary.
13.5 Severability.
In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
13.6 Requirements
of Law. The granting and issuance of Shares under this Plan shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as may be required.
13.7 Delivery
of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares
issued under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary
or advisable; and (b) completion of any registration or other qualification of the Shares under any applicable national or foreign
law or ruling of any governmental body that the Company determines to be necessary or advisable.
13.8 Inability
to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company
of any liability in respect of the failure to issue such Shares as to which such requisite authority shall not have been obtained.
13.9 Investment
Representations. The Administrator may require any individual receiving Shares under this Plan to represent and warrant in writing
that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.
13.10 Uncertificated
Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such
Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.
13.11 Unfunded
Plan. Directors shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries,
and/or its Affiliates may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company
and any Director, beneficiary, legal representative, or any other individual. To the extent that any individual acquires a right to receive
payments from the Company, its Subsidiaries, and/or its Affiliates under this Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as the case may be. All payments to be made hereunder shall
be paid from the general funds of the Company, a Subsidiary, or an Affiliate, as the case may be and no special or separate fund shall
be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.
13.12 Nonexclusivity
of this Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Administrator
to adopt such other compensation arrangements as it may deem desirable for any Director.
13.13 No
Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s
or a Subsidiary’s or an Affiliate’s right or power to make adjustments, reclassifications, reorganizations, or changes of
its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business
or assets; or, (ii) limit the right or power of the Company or a Subsidiary or an Affiliate to take any action which such entity
deems to be necessary or appropriate.
13.14 No
Right to Continued Board Membership. Nothing in this Plan shall confer on any Director the right to continued service as a member
of the Board or in any other capacity.
13.15 Governing
Law. The Plan and each Grant and Deferred Benefit hereunder shall be governed by the laws of the State of Texas, without
regard to choice-of-law principles. The Directors consent to personal and exclusive jurisdiction and venue Dallas County in the
State of Texas. Any controversy or claim arising out of or relating to (i) a Director’s service with the Company or a
Subsidiary or Affiliate and/or (ii) the Plan, or the breach thereof, shall be settled by arbitration administered by the
American Arbitration Association in accordance with its Employment Arbitration Rules before a single arbitrator in Dallas,
Texas, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The Company and
the Director will each be responsible for their own attorneys’ fees and expenses incurred in connection with any such
arbitration. The decision arrived at by the arbitrator shall be binding upon all parties to the arbitration and no appeal shall lie
therefrom, except as provided by the Federal Arbitration Act. These arbitration procedures are intended to be the exclusive method
of resolving any claim or dispute arising out of or related to this Plan, including the applicability of this Section; provided,
however, that any party seeking injunctive relief in connection with a breach or anticipated breach of the Plan will do so in a
state or federal court of competent jurisdiction within Dallas County in the State of Texas.
13.16 Code
Section 409A. Notwithstanding any other provision of this Plan, it is intended that all benefits under this Plan that are subject
to Code Section 409A, including vested Stock Compensation that has been deferred pursuant to Article 7, shall satisfy the provisions
of Code Section 409A, and this Plan shall be interpreted and administered, as necessary, to comply with such provisions.
13.17 Notices.
Notices and elections under this Plan must be in writing. A notice or election is deemed delivered if it is delivered personally or
if it is mailed by registered or certified mail to the person at their last known business address.
13.18 Waiver.
The waiver of a breach of any provision in this Plan does not operate as and may not be construed as a waiver of any later breach.
As evidence of its adoption of this Plan, the Company
has caused this document to be executed by its duly authorized officer the_____day of_________________, 2021.
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TEXAS PACIFIC LAND CORPORATION
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By:
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Name:
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Title:
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To change the address on
your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the
registered name(s) on the account may not be submitted via this method. JOHN SMITH 1234 MAIN STREET APT. 203 NEW YORK, NY 10038 INTERNET
- Access “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy
card available when you access the web page. TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500
from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call. Vote
online/phone until 11:59 PM EST the day before the meeting. MAIL - Sign, date and mail your proxy card in the envelope provided as soon
as possible. IN PERSON - You may vote your shares in person by attending the Annual Meeting. GO GREEN - e-Consent makes it easy to go
paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing
costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. PROXY VOTING INSTRUCTIONS Please detach along
perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE “FOR” THE ELECTION OF DIRECTORS AND “FOR” PROPOSALS 2, 4, 5 AND 6 AND FOR “ONE YEAR” IN PROPOSAL
3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x 20330403030300000000
3 111621 COMPANY NUMBER ACCOUNT NUMBER NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, proxy statement and
proxy card are available at http://www.astproxyportal.com/ast/23956 ANNUAL MEETING OF STOCKHOLDERS OF TEXAS PACIFIC LAND CORPORATION
November 16, 2021 Signature of Shareholder Date: Signature of Shareholder Date: Note: Please sign exactly as your name or names appear
on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full
title as such. If signer is a partnership, please sign in partnership name by authorized person. 1. Election of Directors: MARK “X”
HERE IF YOU PLAN TO ATTEND THE MEETING. O Barbara J. Duganier Class I director O Tyler Glover Class I director O Dana F. McGinnis Class
I director FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT (See instructions below) NOMINEES: 2. To approve, by non-binding
advisory vote, executive compensation. 3. To determine, by non-binding advisory vote, the frequency of future stockholder advisory votes
on executive compensation. 4. To approve the Company’s 2021 Incentive Plan. 5. To approve the Company’s 2021 Non-Employee
Director Stock and Deferred Compensation Plan. 6. To ratify the appointment of Deloitte & Touche LLP as our independent registered
public accounting firm for the fiscal year ending December 31, 2021. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Annual Meeting. This proxy when properly executed will be voted as directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted FOR ALL NOMINEES in Proposal 1, FOR Proposals 2, 4, 5
and 6, FOR ONE YEAR in Proposal 3. FOR AGAINST ABSTAIN 2 1 year years 3 years ABSTAIN FOR AGAINST ABSTAIN INSTRUCTIONS: To withhold authority
to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold,
as shown here:
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ---------------- 14475 TEXAS
PACIFIC LAND CORPORATION Proxy for Annual Meeting of Stockholders on November 16, 2021 Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Tyler Glover and Micheal Dobbs, and each of them, with full power of substitution and power to act alone,
as proxies to vote all the shares of Common Stock which the undersigned would be entitled to vote if personally present and acting at
the Annual Meeting of Stockholders of Texas Pacific Land Corporation, to be held November 16, 2021 at the Omni Dallas Hotel, 555 S. Lamar
Street, Dallas, Texas 75202, and at any adjournments or postponements thereof, as follows: (Continued and to be signed on the reverse
side) 1.1